The Union Cabinet on Wednesday approved the recommendations of the Seventh Pay Commission with minor changes, a top official source told The Hindu. Union Finance Minister Arun Jaitley, who left for Chandigarh soon after the meeting, will announce the hikes this evening.

Union Finance Minister Arun Jaitley, who left for Chandigarh soon after the meeting, will announce the hikes this evening.

The Finance Ministry, which had recommended a 23.55 per cent overall hike in salaries and pensions for over 1 crore government employees, pensioners, in line with the Commission’s recommendations, is fine-tuning the details, the source said.

The pay panel had estimated that implementation of its recommendations could result in an additional burden of Rs. 1.02 lakh crore to the exchequer.

In November 2015, within the overall hike of 23.55-per cent, the pay panel had recommended increases of 16% in pay and 24 per cent in pensions. Its estimate is that these recommendations could result in an additional outgo of nearly 0.65 per cent of the GDP.

The previous sixth pay commission had recommended a 20-per cent hike, which the UPA government doubled while implementing it in 2008. The resultant hit to the exchequer of 0.77% of GDP doubled the centre’s fiscal deficit to 6 per cent in 2008-09, the year it was implemented.

Hikes effective from January

The hikes are likely to be effective from January 1. The arrears are likely to be paid in one go. Of the total financial impact of Rs. 1.02 lakh crore, the panel proposed Rs. 73,650 crore be borne by the general budget and the remaining Rs. 24,450 crore by the Railway Budget. It suggested raising entry level pay to Rs. 18,000 per month from the current Rs.7,000. The recommended maximum pay, drawn by the Cabinet Secretary, is Rs. 2.5 lakh per month against the current Rs. 90,000.